At the end of tax season, most tax preparation firms, large or small, engage in self-examination. They look back at the season that has just ended and think about how successful they were compared to previous years. Whether it’s done through informal conversations with staff or as part of a standardized process, the goal is to assess overall performance, build up strengths and eliminate weaknesses that were experienced during busy season.

“Before the end of the year, we determine our projected billing,” said Fred Berk, co-managing partner of Top 100 Firm Friedman LLP. “We staff up appropriately based on those anticipated billings.”

“Then, subsequent to busy season, we look at the billing,” he said. “The amount of profitability will depend on whether actual billing is above or below the anticipated billing. Then we look at staffing and see how many hours the staff worked during the peak period. Immediately after busy season we analyze that data and then determine our needs going forward, and adjust accordingly.”

Beyond that, Berk said, the firm analyzes each account to see how profitable it was, and then determines, on an account by account basis, what they can do to improve: “Was it properly staffed, did we work as efficiently as possible, was the work done in the anticipated time frame, and were the fees appropriate for the amount of work that was performed?”

The data is put together by a combination of different individuals, and then looked at by the co-managing partners, according to Berk. “Then we have conversations with the executive committee, and have meetings with all the partners at each office. After that, we make determinations as to what the appropriate staffing is going forward, and whether specific accounts need to be modified in some way -- for example, by doing the work at a different time, utilizing different staff, increasing fees, or a combination of these.”

“Like any business, you have revenue and expenses. The goal is to constantly increase revenues while managing your costs,” he said. “The largest and most significant cost is payroll, so we constantly monitor and adjust payroll as needed to service our clients.”


CAREFUL TRACKING

“Our tax season really carries over into two seasons,” said Jonathan Swartz, a partner at Top 100 Firm Bennett Thrasher. “We deal primarily with high-net-worth individuals – people making more than $1 million per year with complicated 1040s. We get half done by April 15, and the other half by October 15.”

The self-examination begins after the April deadline, according to Swartz. “After we catch our breath for a few weeks, we identify how well we’re doing from a financial perspective, usually during the billing process.”

“We have a pretty elaborate tracking system,” Swartz said. “We identify how many returns are left, and if the average time per return is six to eight hours, then we know how many hours we might have left. We hire a lot of college students and interns during the spring, and this gives us an idea of how many we will need to continue during the summer.”

The firm’s tax department, with more than 100 people, is divided into four teams, according to Swartz. “We found that the only way to run it efficiently is to break it up into small pods,” he said. “We have weekly meetings during the season. We track man hour needs, deal with any tax software issues, and give pep talks.”

“Another thing we do is to bill every week for all returns that have gone out, and during that process we identify whether we’re making or losing money on specific clients,” he said. “It might be that certain clients are not a good fit for the firm because their returns are taking longer to prepare than they’re willing to pay to have prepared. We have a relationship with another firm that we refer some of our existing clients to to provide them services at a lower cost, if necessary. When we terminate a client we find a soft landing for them with another CPA firm.”

The firm relies on a tax coordinator to oversee the administration of the department. “It’s an administrative position,” said Swartz. “She can identify which staff has low hours so we can re-assign the work to get it through the system faster. We rely on our managers to make sure their budgeted hours for the process are relatively accurate.”


DISSECTION

Salim Omar’s 15-person CPA firm, Straight Talk Accounting, holds a debriefing session at the end of tax season to evaluate how well they did and what needs to be improved. “We ask the team to evaluate how we did in four or five specific areas,” Omar said. “Before we meet, they will have talked through their ideas, and then we meet for a half-day conference. We dissect the tax season, and in the process we create goals for improvement that we will assign to people to develop before next tax season. It becomes part of their trimester goal.”

Just getting the group together to do a post mortem ensures that everyone is heard as part of the team, Omar indicated. “It gives individual members a platform to share when it’s fresh in their heads, so we do it fairly soon after the completion of tax season. And of course, after the meeting we all go to lunch together – on me.”

A key component of rating a firm is the ‘return rate’, according to Roger Harris, president of Padgett Business Services. “How many clients returned, and how many new clients did you have? And then there is productivity. A measure of that is whether you filed more extensions than in previous years. “

There are three reasons to file an extension, he noted. “One is that the client didn’t get the information to you in time, the second is that a third party didn’t get the information in. The third reason is the one that bothers me – that I had all the information I needed, I just couldn’t get it done. Those are the extensions I don’t want to see increase, because it indicates that I have some internal operational issues that I need to address. And if I feel cramped for time, there may be some clients I need to get rid of to free up time for better clients to take their place.”


1040 forms
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ASK YOUR CLIENTS

Top 100 Firm CBIZ MHM has about 30 locations that do tax work, according to Steve Henley, national tax practice leader. “From a national perspective, we haven’t standardized the rating process other than with a client satisfaction survey,” he said. “The goal is to have one standard process. Our offices look at the process and decide what went right and what went wrong. A key part of the process is to get the work in the system as soon as possible so the work can start, particularly if it’s a major client. It’s important to get it into the system because it improves the workflow. All our offices go through this process to get the work in sooner.”

“It is extremely important to gauge the satisfaction of the client,” said Henley. “How did they feel about the process, and were there any major issues? We have a formal survey to help measure this. Not all clients complete it, but we encourage managers and partner-level people to get feedback even if it’s not part of the formal survey.”

Peoples Income Tax sends out customer satisfaction surveys along with “Thank You” cards, according to director of operations Cathy Mueller. “At our staff meetings at the end of tax season, we look at responses. We also look at the number of returns, and we segment them by particular type. We analyze whether we need to do additional training of our staff in regard to tax knowledge, whether there are customer service issues, and workflow or practice and procedure issues.”

Marketing vice president Terry Judge has someone call clients during the off season. “We ask them if they were happy with our service this past year, if they have any tax questions, and if they need any year-end tax planning,” said Mueller.

“We look at the financial picture by comparing income statements line by line in terms of both dollars and percent. We look for variance between the current statement and last year’s statement.”

Performance analysis is segmented by location, according to Sheila Clark, director of operations at The Income Tax School. “If there are issues with software, it is typically more of an awareness issue that a preparer might have. There are always some unique issues with software, such as miscalculating depreciation in particular types of situations. We want to double-check returns that might have had that issue.”

Client satisfaction, meeting deadlines, and having the best technology are key issues for Boston-based accounting firm Edelstein & Co. LLP, according to marketing specialist Casey Blake.

“We measure this by holding department meetings, analyzing our billing metrics, and asking for real-time feedback from our clients to assess and measure our success,” she said.

“Another key piece to busy season is ensuring that our staff members feel valued, energized and motivated throughout the entire season,” she said. “Happy employees result in happy clients!”

Roger Russell

Roger Russell

Roger Russell is senior editor for tax with Accounting Today, and a tax attorney and a legal and accounting journalist.